21 April 2007

Telecom is not for sale

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“Today I am presenting my usual report but not on the Council of Ministers: at the moment there are the party conferences for the DS, Margherita and lots of other political meetings.
It’s a moment for talking politics, so there’s no Council of Ministers. However, there’s still lots happening and lots of decisions to be taken.
Allow me to return to the Telecom affair. For some time I have been saying that the telephone network, the networks for water, for the motorways, for the railways, that is the most important networks for the country cannot be treated like apples and pears.
If a network is in the hands of private enterprise, they manage it according to their own interest, investing only where there’s most gain: if they doesn’t get enough income from the utility bills they don’t take water to a certain village, if they don’t get enough profits, they don’t install broadband and so on.
You see when it’s a matter of services that are used by everyone, the rules of the market, often talked about, are not enough if they don’t guarantee a service to every citizen.
Once we’ve established the principle that Telecom manages a fundamental network, because without the network communications cannot be passed and therefore there would be a lack of democracy, how come there is such a lot of talk about it at the moment?
Because they say that Tronchetti Provera is selling Telecom Italia. It’s not true! It’s not Telecom that’s for sale.
Telecom is a company with 100% of its shares and Tronchetti Provera is selling only the 15% that he controls.
There would be no problem if we had normal laws, but at the moment it is organised so that whoever has got a relative majority of the shares can control the company. Because the majority shareholding is disparate and cannot be present at the shareholders meeting.
Thus in reality, by controlling a tiny percentage, 15%, it’s possible to control 100% and so make decisions about what investments to make, how to distribute the profits, who to elect to the Board of Directors, when and how to sell one’s shares and in this case, where to install broadband and where not.
Have you ever seen a company being controlled by 15%? It happens in Italy. Not for all the companies, however, only for those that manage services for all the citizens.
They say to the citizens ‘buy shares and create a cattle ring, we will manage the money that comes from the utility bills, from the payments made’. As I said, in this case it’s only 15% that is handed over. Where is the clever stuff? Why I am saying that we find ourselves here with another “wide boy game”?
Because Tronchetti Provera sells his 15% to the “strange strange Mexican” at 3 Euro per share, while the market value is 2.2 Euro per share. You’ll be asking ‘how come someone would pay 3 euro for something costing 2.2 euro?’
That’s just because, as I have been saying many times, by selling his shares, Tronchetti allows the buyer to have control of Telecom.
It is true that that means shelling out nearly one euro extra per share, but it’s also true that it’s enough to buy a small percentage of the company to be able to control the whole thing.
If they were to buy it on the market they would have to launch a takeover bid at at least 2.6 to 2.7 euro per share, and for more than 50% of the shares. Imagine how much money they would have to spend. Instead, they pay a bit more per share and they buy just 15% to control the whole company.
Who loses out? Pantalone, that is the Italian citizens. First of all the small scale investors: if they had launched a take over bid for Telecom shares, the shareholders could sell their shares at 2.6 or 2.7 Euro.
Secondly, all users because the network would be put into the hands of those who want to control it only for their own personal interests and it will be developed only where it gives the economic returns.
This is a private matter being carried on with great lack of concern, only for financial rewards, where there is someone selling for their own gain without giving the market the possibility of establishing the just price.
All those who come to tell me that my behaviour, the behaviour of one who only wants to apply the rules, is going against the market while negotiations are going on, are out of order. They are the ones violating the free market.
The market need the shares to fluctuate because of a takeover bid open to all, while this is a happening in the hands of a few.
Those who violate the rules of the market, on a substantial scale even though not on a formal level, are doing this crafty dodge. It’s not myself, as Minister of Infrastructure and the members of Italia dei Valori. We want to defend the rules in the interest of the citizens.”

Posted by Antonio Di Pietro in Economy